VCs are from Mars, Entrepreneurs are from Venus

John Gray’s book Men are from Mars has the subtitle ”The Classic Guide to Understanding the Opposite Sex”.  To some entrepreneurs, Venture Capitalists might as well be the opposite sex. Many entrepreneurs don’t really understand them very well. In a good blog post by ex-VC and VentureBeat writer Tom Tzach, he offers 4 good tips to entrepreneurs. Here are my comments to his tips:

1. It’s a numbers game. Expect casualties.
Tzach reminds us that VCs get a huge number of requests for their time and money. If you are an entrepreneur seeking capital (especially if this is your first time), then you will have to play the numbers. You might need to pitch to 50 in order to find 3 who are truly interested. You might need 9 who are truly interested before you find one who will give you the funds.  Just like sales, it is a pure numbers game and the odds are not great, especially in today’s market where many investors are (un-admitably) scared.

I was at a venture meeting in Lisbon a few weeks ago and talked to one of the really classy European VCs (Diana Saraceni from 360 Capital Partners in Milan). She said that even though they have only 4 partners at her firm, they received 1202 business plans last year. They held 354 meetings with entrepreneurs and closed 6 new deals. If you are one of the 1202 then be prepared for a rejection. It is not personal. It only means that there are other (better?) deals out there ahead of you in the queue.

Tzach writes that in the US less than 2% of entrepreneurs pitching get funding, and that the average time for the process takes from 9 to 12 months. Don’t be discouraged, just plan to work hard.

2. Develop a VC pitching strategy
You will certainly need a strategy or else you will just end up shooting at any animal in the jungle that moves. Tzach recommends that you develop key parameters (like history, relevance of their portfolio, location, etc.) and then divide the prospective VCs into ranked groups. Start with those that are least likely to invest so that you get some practice before you tackle the big boys. Plus, if you screw it up in the first meetings, it won’t kill you. I think you will experience that pitching is a huge (and fun) learning experience.

3. You need to play your cards right
I have always been a lousy card player because I tend to play out my cards without a longer-term game plan (OK, I have other redeeming skills). Tzach reminds entrepreneurs that the VC community is small and that VCs like to talk together a lot. Expect this, but be selective in how you handle and manage your communication. Negotiating with 2 different VCs at the same time is not an ideal situation. Try to work out your deal with one and then shop the same deal to others if you need to fill the offering. Remember that while term sheets are confidential, they will be around long after you are gone. Treat them with extreme professionalism and care. I have a consultant (who I pay with options or shares) who always helps me with term sheets. He has saved me huge amounts of money and some rather embarrassing mistakes.

4. Don’t seek funding under pressure
The best time to visit a banker is when you are not in need of a loan. The best time to start your fundraising work is long before you actually need the capital. Fundraising will take a long time. It is like selecting a wife – you should use a lot of time to get to know each other before you tie the knot. VCs are smart and they will sense it if you are under pressure, plus when you show them your cash-flow budgets and financial statements, they will quickly figure out your predicament. Plan ahead.

Just as 50% of all marriages end on the rocks, only about 10% of all VC investments actually pay respectable returns. Realize that this is the reality and plan your strategy accordingly. Good VCs can be fantastic partners who can help you (not only with capital, but also with lots of assistance) to grow your business much faster than on your own… But you have to play by their rules in order to get them on your team.

Want to turn-around your business and achieve results in record time?
Contact me to discuss Executive Coaching, Group Facilitation and Management for Hire services for technology companies. You can learn more at www.ricksalmon.com ,  www.xelerator.com and at www.e-unlimited.com. Rick Salmon is an energetic entrepreneur who lives in Norway and believes that European startup companies can succeed and grow quickly if only they get the proper help and assistance. Please join the discussion and leave your comments. Subscribe to this newsletter/blog to receive frequent updates and tips.

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Serial Killers?

We need more serial entrepreneurs!

Yesterday I led a workshop for 20 young entrepreneurs in Dusseldorf, Germany. I asked them if they knew the expression “serial entrepreneurs”. Few did.  I asked if they knew the term “serial killers”. Yes. They all had watched enough TV crime shows to understand that term.

OK, so I challenged them to learn to become “serial entrepreneurs”. A serial killer commits one murder after another. A serial entrepreneur completes one startup and then immediately starts to dream about the next. Call this an illness or call it a calling in life. Some people just get it. Some people just don’t. Some people love the ability to convert an idea into a plan, a plan into a team, a team into a business, and a business into something of immense value and social change. Others just don’t understand the motivation that is needed to do this.

The workshop was the start of an 8-month program where 15 selected technology companies from the North Rhine Westphalia region will get special help, assistance, coaching and individual follow-up from experienced entrepreneurs and investors. In one way, this is a grand experiment. Just like young plants need special care and nutrients in order to grow quickly, this program seeks to nurture and to fertilize the environment where these 15 young companies will grow. The Dusseldorf region is a fertile growing ground. We are trying to make it even more so.

We need more serial entrepreneurs. We need more people who have learned how to start and build small businesses. We need more people that know how to write business plans and then how to raise capital to realize their dreams. We need more people who are willing to take risks and we need political systems that reward people who take initiative and create value.  The most important and vibrant part of any growing economy is the grassroots of startup companies that spring forth on their own.  Nurture them.

- Rick Salmon

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Want to turn-around your business and achieve results in record time? Contact me to discuss Executive Coaching, Group Facilitation and Management for Hire services for technology companies. You can learn more at www.ricksalmon.com ,  www.xelerator.com and at www.e-unlimited.com.

Rick Salmon is an energetic entrepreneur who lives in Norway and believes that European startup companies can succeed and grow quickly if only they get the proper help and assistance. Subscribe to this newsletter/blog to receive frequent updates and tips.

Picking the Winners

How do you pick future champions while they are still young and developing? How do you identify a talented team of entrepreneurs at an early stage? How do you measure the real potential of a startup business?

In the world of sports it has long been a quest to pick the future champions from among the young. There are DNA tests, muscle tests, enzyme tests, psychology/personality tests, but in spite of a lot of fancy technology no one has really figured out how to do this effectively. It comes down to a gut feeling about the innate qualities of a competitive athlete. Yes, there are physical issues to consider, but once those basic criteria are met, then it comes down to the spirit – the mental game. How tough a competitor is this kid really? In sports you will sometimes find kids who are big – bigger than the other kids their age – and therefore better at their sports. Will these kids be the top performance athletes later? Most of the time the answer is no. Look for the little guy who has had to work twice as hard as the bigger kids – the one who has an unstoppable attitude – and you will find the future winners.

I have recently been asked to be the President of the Selection Jury for the 2009 European Venture Awards and I am thinking a lot about selection criteria. Over 700 startup companies have competed in this year’s competition. They are all smart people. They are all talented in some field. They are all entrepreneurs seeking assistance to give birth to their companies, but how can we pick the real champions? Hint: It’s not about the technology. It’s not about the products or the services or the implementation and adaptation of science… It’ about the people.

Find the little guys with unstoppable attitudes and you will find the future winners. I saw a report by the US Venture Capital Association last year where they had statistics on the valuations of early stage investments by Seed and VC investors. Only 10% of the value was attributed to IP, patents and technology. 5% was attributed to the actual market that the company was targeting. What surprised me most was that 85% of the valuation was attributed to the team. It’s all about the people.

Author Jim Collins (http://www.jimcollins.com) has proposed THE BUS THEORY. It states that if you can just get the right people on your bus and get them into the right seats, then you will figure out how and where to drive the bus in order to succeed. Your business is your bus. Get the right people onboard and you can easily fix a faulty business model. Get the wrong people onboard and you will quickly drive it into a ditch. Picking winners is all about the people.

Want to turn-around your business and achieve results in record time? Contact me to discuss Executive Coaching, Group Facilitation and Management for Hire services for technology companies. You can learn more at www.ricksalmon.com and at www.xelerator.com.

Rick Salmon is an energetic entrepreneur who believes that this beautiful world that we have created needs our help. Subscribe to this newsletter to receive frequent updates and tips.

Rick Salmon appointed President of Selection Jury for 2009 European Venture Contest

(Oslo, Nov. 12, 2009)

Europe Unlimited has appointed Rick Salmon as President of the Selection Jury for 2009 European Venture Contest Finals which will be held on December 14th and 15th, 2009 in Barcelona. The Jury will consist of 30 distinguished members representing the Venture Capital community in Europe. The mission of this annual venture contest is to find, evaluate and award world-class innovative companies with the potential to dramatically impact their industry and contribute to increasing European competitiveness and growth. This year over 700 startup companies have competed in the contest this year and the top 25 have been chosen to go to the finals in Barcelona.

Jury members will select a winner in each of the 3 categories of cleantech, life sciences, and ICT. From the top 3 companies, 1 overall winner will be selected and awarded a cash prize of EU 90,000. The companies will be evaluated on the basis of 7 factors (including business potential, team experience, investment potential, competitive position, presentation, etc.).

Rick Salmon competed in the 2008 European Venture Contest as CEO of RPR Technologies AS (Norway) and was selected as winner of the Cleantech category. This year, he has been asked to be the President of the Jury in order to represent and promote the entrepreneur viewpoint and to acknowledge his work with empowering European entrepreneurs.

If you are an entrepreneur who plans on raising capital or expanding your network in 2010, register now for the 2010 Eurecan European Venture Contest. For more information about Europe Unlimited, see: http://www.e-unlimited.com

Pitch your Baby

I have a friend who just had his first child. He’s over the moon about this baby and OK, all his friends are happy for him too, but he sends out constant emails with photos, short video clips, frequent little stories about first baby steps. There are facebook pages and even twitter messages from time to time. This is a great example of pitch and even the most experienced entrepreneur in the world could learn a thing or two from a new parent.

This is how you should pitch your startup company… just like it was your newborn baby child. Pitch your business with enthusiasm, pride, a strong sense of purpose and a belief that this baby will someday grow into something big and fantastic!

Pitching your startup to venture capital people is a blast and also a great way to accelerate your business development. I learned early-on that getting honest and direct feedback is essential in order to help me as an entrepreneur to face reality and to keep my startups on the right path. Honest feedback may not always be pleasant to hear, but it is always valuable – either to confirm or to correct your strategy.

Seek out opportunities to pitch your business to experienced businesspeople and especially to venture capitalists. There are lots of different venues for pitching. Check out the Europe-Unlimited venture events, which are free and open to all European startups. You will be amazed what you will learn.

Want my feedback on your business pitch? Contact me today. Maybe I can help.
rs(@)xelerator.com

Rick Salmon is an energetic entrepreneur who believes that this beautiful world that we have created needs our help. Learn more at www.ricksalmon.com

photo credit: Quinn Dombrowski

Let the old trees die

While the global finance crisis might be showing some signs of improvement, the outlook for the entrepreneur is still bleak. Without easy access to capital, entrepreneurs cannot grow. A forest without new growth will age quickly just like an economy without new growth will fall. While governments around the world are busy propping up old businesses in order to save jobs, they might just be missing an important point. Old forests are supposed to die in order to make way for the new.

This weekend I read about Joseph Schumpeter, a Czech economist who was a professor at Harvard for over 30 years. His theory was that there is a process he called Creative Destruction, in which after a long period of growth, a crisis must arise. Each crisis creates its own new dynamics and as a result, new technologies will emerge or be used in a new manner. As a result of this, entrepreneur activities will increase, new companies will start and some of the old companies will die off. The old professor believed that this is a natural cleaning process, especially after long periods of sustained growth, and it is necessary because it creates a capacity for new growth.

Early-stage entrepreneurs must have access to capital in order to survive. During the internet boom of the early 1990's we learned that giving huge amounts of money to young and inexperienced entrepreneurs is like inviting the local Hell's Angels group to your house for an all-you-can-drink free beer bash. They will probably drink you dry and trash your house in the process. Even if in small amounts, early-stage entrepreneurs must have access to capital in order to keep their dreams alive and to meet simple milestones for solid growth.

For the representatives from local government who are reading this article, please keep the programs alive that give small loans and grants to early-stage entrepreneurs. Make it easier for them. You can also encourage companies that assist startups by offering them tax breaks and incentives. Make certain your local new growth economy is getting help so that it does not wither and die. When your big old trees come crashing to the ground, it is only the new growth that will sustain you.

For the entrepreneurs who are reading this article, don't give up. This crisis will also pass. They all do. Whether it takes 6 months or 2 years, if you keep your dream alive, you will be positioned for rapid growth when the smoke clears. Get help from companies that promote meetings between local governments, entrepreneurs and venture capital. Keep the faith. Help is on the way.

Xelerator client RPR wins prestigious European Venture Award

Xelerator Backround Info: RPR Technologies has been an Xelerator client for the past 3 years. In 2006 Rick Salmon took over as CEO for RPR in order to help the founders get their patented prototype on the market. The first thing Xelerator did was to assemble a professional Board of Directors and to raise the initial seed financing needed to launch the company. By the end of 2006 the first products were shipped and in 2007 the company passed breakeven. Today RPR employs 6 people, has established sales channels in N.America and W.Europe and has been publically recognized as an exciting and growing young Norwegian business. As part of a strategy to position the company with potential investors, RPR entered a series of venture competitons in August 2008. After winning both "Best Presentation" and "Best Elevator Pitch" awards in the qualifying rounds, RPR qualified for the finals of the EURECAN EUROPEAN VENTURE CONTEST and went on to win the award in the Cleantech category. Note that this is a strategy that Xelerator would recommend for all startup companies. If you are interested in learning more about how to succeed with this type of tactic, contact Xelerator today.

Norwegian company wins prestigious award with “Clean Technology"
RPR Technologies wins “Best Cleantech Company” prize in European Venture Awards

(Porsgrunn, Norway - January 13, 2009)
Removing paint from ships and oil platforms is hazardous to the environment and to operators. A new Norwegian technology virtually “peels” off paint instead of using sandblasting or high-pressure water blasting. This is accomplished in a fraction of the time and is so environmentally friendly that the company RPR Technologies was awarded as the “Best Cleantech Company” in the Eurecan European Venture Awards.

RPR Technologies A/S of Porsgrunn, Norway won the Best Cleantech Company award at the recent 2008 Eurecan European Venture Awards contest in Barcelona, Spain. RPR has invented a new technology for removing paint and corrosion from steel surfaces that is significantly cleaner for the environment than the traditional paint removal methods (sandblasting and waterblasting). The RPR machines use a patented process with induction heat to remove paint from steel that is not only cleaner, but also safer for operators and from 2 to 10 times faster than competitive methods, that emit hazardous dust and water waste into the sea and air. The RPR process creates no harmful waste byproducts and allows operators to work quickly, cleanly and safely.

The Eurecan European Venture Award is a multi-stage contest aimed to identify, promote and reward the most innovative early stage companies in Europe. The selection jury was comprised of experts from industry and venture capital and has evaluated the companies on the basis of 7 criteria (business potential, team experience, technology merit, competitive position, investment interest, growth potential and the entrepreneur). In this year’s competition 725 companies registered to compete. 261 companies were selected for the semi-finals and 21 were selected for the finals which were held on December 17 & 18, 2008 in Barcelona. RPR Technologies of Porsgrunn, Norway was awarded first prize in the Cleantech sector.

“Being selected as the top cleantech early-stage company in Europe is a huge honor for RPR. In these times of global financial crisis, it is important that the good young companies get help and assistance in order to grow “ says Rick Salmon, CEO at RPR Technologies A/S. “Not only is our product good for the environment, but it also allows our users to be more competitive financially. We believe that the market for ship and offshore repairs will actually increase in light of the current economic conditions and this technology can help protect industry jobs in countries where labor costs are high.”

About RPR
RPR Technologies manufactures an industrial machine that removes paint and other coatings from steel surfaces using the process of induction heat. This is a unique, cleantech technology that has been patented in 54 countries and competes with the traditional methods of paint removal such as sandblasting and ultra high pressure (UHP) water blasting. The competitive advantages are that the RPR process is CLEANER than blasting (no hazardous airborne or water waste), SAFER for operators (silent, minimal safety equipment required) and FASTER - especially when removing thick difficult coatings (from 5 to 20 times faster). This can result in considerable cost savings for customers. There are four initial target markets; marine, offshore oil platforms, land based oil & gas pipelines, and storage tanks (chemical, oil & water). RPR is based in Porsgrunn, Norway. On September 29, 2008 RPR was also the winner of “Best Presentation Award” at the EVC Cleantech Venture Forum in Linz, Austria.

See the following links for more information (Norwegian Language only):

	NRK.no: Vant europeisk miljøpris (European Environment Award)
	Offshore.no: Miljøpris til RPR (Environment Award to RPR)
	Varden.no: Internasjonal miljø-pris til lokal bedrift (International environmental award to local business)

About the European Venture Awards
For more information about the European Venture Awards see: www.e-unlimited.com
Contact Person: Tanja Baltus, Europe Unlimited, Place Flagey 7, B1050 Brussels, Belgium
Tel: +32 264 33682 Email: tanja@e-unlimited.com

For more information about RPR Technologies A/S, see www.rprtech.com
Contact Person: Rick Salmon Tel: +47 9139 0604 Email: rs@rprtech.com

2 Xelerator Companies pitch to international Venture Capital firms at Norwegian Techtour 2008

Two companies that Xelerator is working with were chosen as finalists in the Norwegian TechTour 2008. Both MobileAxept and RPR Technologies presented their business plans to a group of Norwegian and international investors and Venture Capital companies in Oslo and Stavanger.

The following is from the Tech Tour press release:

"The European Tech Tour will be coming to Norway in August 2008 to meet the most promising start-ups and early stage technology companies from Norway. Applicants will compete to become one of the 25 successful finalists invited to present their business expansion plans to representatives from the global venture capital world. Finalists will receive advice from these venture capital experts and enjoy numerous networking opportunities."

Finalists are assessed and identified by the committee based on six key points:

1. Uniqueness of the technology
2. Solid business model
3. Vision
4. Capability to execute the business plan
5. Targeting relevant markets
6. Quality of management team and track record

MobileAxept was presented by Helge Krøgenes, who is a founding partner at Xelerator and CEO at MobileAxept. RPR Technologies was presented by Rick Salmon, who is also a founding partner at Xelerator and CEO at RPR Technologies.

Links to news articles about the Norwegian Tech Tour:

• Finansavisen, May 18, 2008 (Norwegian) Page 1, Page 2
• EuroInvestor, Aug.28, 2008 (Norwegian) TechTour
• Argentum, Aug.27,2008 (Norwegian) TechTour winners